The Multiplier The multiplier ratio is the ratio of change in real income to the injection that created the change E.g. If the UK government injected an additional £5m into the economy through gove...
Real National Output Equilibrium Short-run Equilibrium Real national output equilibrium occurs where aggregate demand intersects with aggregate supply A diagram showing the Classical short-run equi...
Injections & Withdrawals Money can enter or leave the circular flow of income in an economy Injections add money into the circular flow of income and increase its size Increased government spen...
The Circular Flow of Income The circular flow of income is an economic model that illustrates money flows in an economy There is a simple model which shows the money flows between households and fi...
Keynesian Versus Classical Long-run AS Long run aggregate supply (LRAS) is influenced by a change in the productive capacity of the economy Productive capacity is changed by changes to the quantity...
Factors Influencing Short-run AS There are multiple factors that can influence the short-run aggregate supply (SRAS). These include: Changes in costs of raw materials and energy Changes in exchange...
The Aggregate Supply (AS) Curve Aggregate supply is the total supply of goods/services produced within an economy at a specific price level at a given time A diagram showing the upward sloping shor...
Influences on the Net Trade Balance The net trade balance is the difference between the value of the exports and imports (X-M) The net trade balance is influenced by changes to real income, exchang...
Influences on Government Expenditure Government expenditure is influenced by the trade/business cycle and spending linked to achieving policy aims Government expenditure can happen on a local level...
